Treasury review of NHS charities sparks 'nationalisation' fear

Treasury plans to place charitable assets worth £500m on the public balance sheet for the first time will have the effect of “nationalising” NHS charities, critics of the move have warned.

The Treasury’s review group of NHS linked charities published its final report last week, recommending that voluntary organisations with an NHS body as the sole trustee “consolidate” their accounts. It means that while NHS charities will remain separate legal entities, their finances will be accounted for together with their linked trust.

However, a minority report by dissenting members of the Treasury group, including Keith Day of the Association of NHS Charities, and Charity Commission head of accountancy policy Ray Jones, expressed “continuing disquiet” with the plans. They warned: “A hard pressed finance team within an NHS trust/foundation trust might well come to regard the charitable funds as simply another budget.”

The report’s recommendations have been endorsed by the Treasury, Department of Health and Monitor, and will take effect from April 2013.

There are 302 NHS charities in England, and the new rules would affect 281 of them. Their combined assets are worth £500m.

The report concludes that in practice, where an NHS organisation is a charity’s only trustee, the “objects of the [charity] are entirely consistent with the activities of the NHS body”.

It recommends applying an international accounting standard to linked charities, to “increase the transparency of the use of charitable funds within the NHS and improve the information on which stakeholders can make decisions”.

Foundation Trust Network chief executive Sue Slipman told HSJ: “I’ve heard no clamour for this whatsoever from boards with linked charity organisations. It’s entirely driven by accounting rules rather than the protection of charitable purposes… it could undermine people’s willingness to give.”

The charity sector has also voiced concern. Association of Chief Executives of Voluntary Organisations chief executive Sir Stephen Bubb has written to health secretary Andrew Lansley and chief secretary to the Treasury Danny Alexander urging them to reconsider.

He said: “It raises the bizarre spectacle of a Conservative government, committed to promoting charity and giving organisations more freedom from the centre, achieving what the nationalising Labour governments of the 1940s could not – the effective nationalisation of NHS charities.”

A DH spokeswoman sought to reassure donors “their donation will be used in the way that they intended”.

She said: “Charitable funds are not and will not be part of NHS budgets. They are protected by charity legislation to ensure funds are spent appropriately and as specified by the charity.”